I would say that William Cohan has had enough. The author of several books about the financial sector cannot believe that nobody on Wall Street has been held to account for the crisis that caused the Great Recession. And though it pains him to end up on the same side as Elizabeth Warren, to whom he delivers a sneering aside, and though the op-ed as a whole gives far too much respect to the idea that “these things happen” in capitalism, overall Cohan summons a good deal of moral force here.
At the moment, the message we are broadcasting far and wide is: There will be no justice; there will be no accountability; let’s return to the status quo as quickly as possible [...]
No one — no one — on Wall Street has paid a serious price. The one criminal prosecution — of the Bear Stearns hedge-fund managers Ralph Cioffi and Matthew Tannin — failed miserably. Every bank has received its slap on the wrist, has had its insurance carrier or its shareholders cough up a few hundred million dollars — the cost of doing business, don’t you know — and moved on. And governments, most recently New York State, have decided to milk the banks for badly needed cash rather than charge the miscreants themselves.
Once upon a time, prosecutors were vigilant about prosecuting bad financial behavior on Wall Street. According to the Financial Times, during the savings-and-loan crisis of the mid 1980s, some 3,500 bankers were jailed for their transgressions. I still haven’t heard a good reason why the number of successful prosecutions in the wake of our most recent financial crisis remains at zero.
This has become old news. The world-weary cynics among us say that you can’t fight City Hall, or in this case the corporate executive suites (there’s increasingly no difference), and they scoff at anyone who would dare to think differently. But there’s a fine line between having the awareness to see a fix in the making, and failing to be outraged by it. I don’t really care that “nobody has been prosecuted for the financial crisis” is an old and tired refrain; what matters is that it’s an appropriate refrain, and that the fact of it still must shock the conscience of anyone who didn’t benefit from the transaction.
Hamilton Nolan gets at this point in a discussion over Greg Smith, the former Goldman Sachs banker whose new book details the ways in which the vampire squid screwed over its own clients. I haven’t read the book, but this seems very right to me:
What bothers most Wall Street-savvy critics about Greg Smith is this: he got a lot of attention for complaining about a situation that all of these Wall Street-savvy people already know exists. Smith’s charges were, for them, old news—and worse, they smacked of a naivete about what banks like Goldman Sachs do. These Smith-haters resent the attention he reaped, and charge him with being either stupid, or dishonest about what he was doing for those 12 years he worked at Goldman [...]
I would simply like to assert that, no matter whether or not you believe Greg Smith is a hero or an opportunist, he did what we would all hope that our own banker would do: he spoke out publicly about something that was wrong. The fact that his charges are old news to the Wall Street people, the bankers, the financially savvy, and the media figures that cover them is not an indictment of Greg Smith. It is an indictment of everyone who accepted rapacious amorality as the natural order of things. It is not important whether or not Greg Smith is a hero. What is important is the principle that people in positions of power should not grow so inured to corruption or unfairness or the rotten nature of their particular institution that they accept that state of affairs without question. To understand how something works does not mean that we must lackadaisically assume that it should work that way. And we should never become so cynical that we create an environment in which whistleblowers receive more criticism than the institutions they blow the whistle on.
Old news can still have news value, in other words. Until the fraud and abuse actually stops, it’s incumbent upon those who know the system for what it is to speak out. Silence because of fear of repetition makes no sense at all. Nor does the cynical response of boredom at well-worn facts. The financial oligopoly at this point profits from the expectation of dealing in bad faith. It assures that nobody will do the work to reverse the trend, that fraud is endemic to banking and people just have to deal with it. We lose quite a lot when we give up that rhetorical ground.